CBA STOPS ITS INTERVENTIONS IN FOREIGN CURRENCY MARKET

Noyan Tapan

M arch 4, 2009

YEREVAN, MARCH 4, NOYAN TAPAN. The Central Bank of Armenia (CBA)
stopped its interventions in the foreign currency market and returned
to a floating exchange rate regime. The CBA Chairman Arthur Javadian
said at the press conference on the same day that in this way the
exchange rate of the dollar will find its equilibrium level, which
will promote economic activity and job creation in the country and
increase the competitiveness of Armenian goods.

According to the CBA chairman, the equilibrium exchange rate of the
dollar will make 360-380 drams in Armenia in 2009. By his forecast,
the exchange rate is likely to reach this level in the foreign currency
market within two days. In his words, the policy conducted by the CBA
so far was aimed at ensuring financial stability in the country. In
the past 3 months the capital of the banks grew by 40 billion drams
and they purchased more than 250 million USD. The CBA chairman said
it means that the financial state of the banks is currently quite
stable and they can withstand the economic crisis.

At the same time the CBA expects that the shift to a floating exchange
rate may result in a rise of prices. For that reason the refinancing
rate was raised by 1 percentage point to 7.75%.